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IVCA Conclave 2021: Investors say pandemic was life changing but brought tech to the forefront

In a panel titled, Managing Turbulence: Scanning the Venture Capital industry in India, VCs spoke about what the past year has been like and how things have changed from the beginning of the Covid-19 pandemic to today

Mumbai / March 18, 2021 / 08:46 PM IST

The early days of the COVID-19 pandemic was hard on everyone but the industry has emerged stronger and technology has become more important than ever, investors said at the IVCA Conclave 2021.

Roughly a year ago when India went into the first lockdown, no one was sure what to expect, and venture capitalists asked companies to slash costs to the bone and preserve cash for as long as possible. “The lockdown was very very daunting. We didn’t know how to help the founders. We were just telling them to walk out of COVID standing. How do you stop salaries? How do you take away jobs?” said Padmaja Ruparel, co-founder of Indian Angel Network.

Manish Kheterpal, managing partner of Waterbridge Ventures said that dividing companies into unlucky, the rockstars and the unsustainable ones was important. “We divided our companies into buckets. There are the bubble babies- who get funded in good times but have no long term potential. No runway and no model. Investors need to call these early, try to find a home for them, or see whether the founder can do something else,” he said.

The initial months of the lockdown were hard, but as the economy opened up, companies bounced back much faster than many expected them to, and many internet firms actually surpassed their pre-pandemic volumes soon.

“This experience is bound to stay with them, and change how they deal with the crisis. Startups are no longer startups. It brought a lot of pain and hurt but enabled to rebuild stronger, faster and better,” said Sehraj Singh, Managing Director, Prosus India.

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Internet firms also bounced back faster because during the pandemic more people started using online services for ordering food, staples, discretionary items, getting haircuts and more.

“We always knew there would be a tipping point for wide scale adoption. The pandemic did that,” Singh added.

The importance of technology adoption was felt by the world at large, including startups, venture capitalists and private equity firms.

“For the PE/VC business, the definition of being tech enabled was limited to spreadsheets, Customer Relationship Management and Skype till a year or two back,” said Rakesh Bhatia, Founder & CEO, TheCapitalNet.

“That realisation brought in fast tech adoption. This industry has not always adapted to tech very fast despite backing innovation. For several months there was a state of denial. Things that we taught our portfolio companies, we have to apply ourselves,” he added.

Beyond the consumer internet market getting larger, enterprises and deep tech companies are also benefiting from the pandemic and big companies are willing to spend on SaaS firms, niche solutions and using leading technology. “India has become more sophisticated for global innovation. We are seen as a nice complement to what China used to provide. India can be a hub for SaaS, manufacturing and deep tech beyond only consumer firms,” said Karthik Reddy, Vice Chairman, IVCA and co-founder and Managing Partner, Blume Ventures.

Kheterpal of Waterbridge said that investing for the long term and making contrarian bets are likely to yield good outcomes for investors in the years to come, and going deep into a sector sector could help.
M. Sriram
first published: Mar 18, 2021 08:45 pm

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